In this section we aim to give you some advice around used car warranties
Should I buy a used-car warranty?
We believe it really depends on your circumstances but some digging reveals some shocking truths – mainly surrounding the minefield of Terms and Conditions within each policy.
There are a number of companies offering used-car warranties and while we won’t name any here, a simple search on Google will show you a number of well known names, you may of even heard of them.
What are my other options? After your car’s manufacturer warranty has expired you may be able to get extended cover from the manufacturer or even the franchise you bought the car from, these are often more competitive than the 3rd party companies out there in terms of exclusions, but cost-wise they can be very similar.
Some research reveals that used-car warranties can cost more than 10 times the average annual repair bill for a typical family car. For example in a recent Which? article a four-year-old Honda Civic 2.2 i-CDTI has an average annual repair cost of just £53, this compared with a 3rd party warranty for a wallet-crushing £642.65!
Here’s some of the Terms and Conditions that you must watch out for:
Some policies have limits on garage hourly labour rates such as £60 per hour up to £200 per hour.
Age limit – If your car is approaching the maximum allowed age, it may not be worth buying a used car warranty.
Betterment – Watch out for these clauses. Essentially when a repair (such as a new engine) makes a car more valuble, you may have to pay a percentage of the cost, which increases, the older the car gets.
Breakdown cover – Most warranties offer this as an extra-cost option.
Claim limit – Check the limit for each individual warranty claim – ideally it should be up to the value of the car. To put this into perspective, one provider has a limit of £500 per claim!
Consequential loss – This is where the failiure of one part causes damage to another or some other loss. For example, a fuel line might leak and damage an electrical component.
Excess – A combination towards the cost of each warranty claim. Look out for percentage excess clauses, these ramp up the amount you pay as your car’s mileage increases.
Expenses – You may be able to claim the cost of expenses, such as a hotel room or hire car. Check your policy wording.
Garage choice – Can you choose where your car is repaired? Some companies have networks of ‘approved’ garages. If you go elsewhere, you may need to pay an excess labour rate.
Labour rate – Third-party warranties usually impose a limit on the hourly labour rate for repairs. These vary widely, but most won’t cover the cost of repair at a franchised dealer. If you want to use a pricier garage, you’ll pay the extra.
Mileage – Check whether there’s an annual or total mileage limit above which the warranty won’t pay for repairs.
Pre-existing faults – Any faults that your car had before the policy started may not be covered.
Regulated provider – Make sure your provider is regulated by the Financial Conduct Authority and you get a 14-day cooling-off period.
Servicing schedule – You must keep the car serviced according the the manufacturer’s schedule, and keep all the paperwork. Be careful about fitting non-standard parts; these could invalidate your cover.
Time limits – Some providors state that you must be with the scheme for a period of time (for example 90 days) before you can make a claim. This would effectively mean a 12-month warranty is only valid for nine months.
Warning lights – If you ignor any warning lights on your car’s dashboard and carry on driving, the provider may refuse to pay out.
Wear and tear – Items that fail becuase of wear and tear are commonly excluded. Even policies that claim to cover it, restrict cover to mechanical and electrical parts. ‘Consumables’, such as tyres and brake pads, aren’t included.
As you can see above this is just the tip of the iceberg – there are so many policies, terms and conditions that are in place, and understandably so, they simply wouldn’t be able to pay out for EVERYTHING, you have some cars cheaper to repair than others, faults that cause another fault and so on; but knowing your rights and understanding the benefits and drawbacks gives you the POWER.
So to finish, we would advise you to simply make sure you fully understand what is covered and what your paying for, shop around within this rule but be careful!